Business Credit Score: 7 Ways To Maximize Your Company Scores
Let's suppose that you've taken a few steps necessary to establish business credit for your company
. You got approved for a line of credit with a few suppliers, made purchases, paid your invoices and see the payment experience listed on your business credit report.After seeing your business credit score you decide to jump into the big leagues and apply for a business credit card without supplying a personal credit check or personal guarantee.
You're shocked to find out that your business was declined and you can't seem to figure out why. You have a favorable paydex score with Dun and Bradstreet so what's the problem?
This happens more than you can imagine and because of all the misinformation circulating the internet about what it takes to build a strong business credit score and report many business owners simply throw up their hands and say well at least I gave it a shot.
First, in order to qualify for financing other than vendor credit lines you will need to have a strong business credit score and report with all three major business credit bureaus.
Not one, not two but all three!
In addition to getting listed with all three major bureaus you also need to build a strong profile and score.
Here are 7 Ways to Maximize Your Business Credit Score:
*Pay Better Than On Time - Paying your invoices 10, 15 or even 20 days ahead of the due date can classify your business as one that pays 'better than terms'.
This looks extremely favorable on your credit files and can increase your scores.
*Minimize Debt to Credit Limit Ratios - Keep your debt to credit limit ratios at no more than 30%. This helps reduce your company's overall debt exposure. You don't ever want your company to be perceived as overextended.
*Establish Payment History - Making a onetime purchase with a supplier hardly establishes your company's creditworthiness. You should make purchases using your credit line on a consistent basis in order to build a solid payment track record. The longer the payment history the stronger the file you will have.
*Add Trade References - If you have suppliers that are not listed on your files you can easily add them by utilizing DNB's trade reference builder program.
By adding a couple of additional trade references with years of payment history can dramatically improve your business credit score.
*Increase Credit Limits - Don't hesitate to request a credit limit increase with suppliers or creditors that you have a good track record with.
But keep in mind, if you're not utilizing your existing credit lines and using a good portion of the limit a supplier or creditor will flat out deny your request.
*Establish a Reporting Bank Loan - Obtaining a reporting bank loan on your credit files is priceless and can open more doors than you can imagine.
Many creditors realize the scrutiny that banks impose on a company in order to get a loan so simply having one speaks volumes for your company's creditworthiness.
A good strategy is the CD Secured loan which many banks still offer to this day.
*Diversify Your Credit Types - This by far is one of the most important factors for a strong business credit score and report but it's the one that is least discussed.
Your company should have a diversity of credit types reporting on its file such as trade credit, revolving credit, lease credit, lines of credit, etc.
By getting listed with the major business credit bureaus and applying these seven strategies you can expect your company to be well on its way to maximizing its business credit scores and reports.
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